The present invention relates to a process and system for marketing products and services, and in particular to a process and system which allows buyers to obtain assets in exchange for promises to make future purchases of other products and services.
Traditional purchase transactions require buyers to have sufficient and available funds. Alternatives to cash transactions include a variety of credit in the form of loans and credit lines and have long been recognized as available mechanisms for buyers to obtain assets without an initial investment of money.
Purchasers relying upon credit to obtain assets may incur charges including interest and late-payment penalties. Interest rates vary depending upon the type of loan and the type of agreement with lenders. Credit cards may charge no interest if monthly bills are paid immediately when due, usually within thirty days of the receipt of the credit card invoice. However, if a credit card invoice is not paid within thirty days, additional charges including interest and late-payment penalties may accrue. Other types of loans may impose charges on the borrower including interest which begins to accrue immediately upon the start of the loan.
In place of credit and cash purchases, new types of purchase transactions have emerged in the commercial marketplace. Suppliers recognize the value of guaranteed future purchases and offer goods and/or services to buyers in exchange for promises to purchase a minimum number of related goods and/or services in the future. For example, book seller A offers a buyer ten books in exchange for a promise to purchase a minimum number of books within a specified time period. When the buyer purchases the agreed to number of books within the specified time, he fulfills his obligation and the transaction is complete. The buyer obtains the initial ten books at the cost of guaranteeing book seller a minimum number of future purchases. In these types of “book club” transactions, buyers are obligated to fulfill their minimum orders by purchasing from the original seller. In the preceding example, if the buyer purchases a minimum number of books within an agreed to time period from book seller B, his obligation to book seller A would not be discharged. Examples of companies offering goods and services in exchange for promises to purchase goods in the future include BMG Music Service, Columbia House, Quality Paperback Book Club and the Doubleday Book Club.
In addition to purchase transactions wherein goods and/or services are obtained in advance and in exchange for promises to purchase a minimum quantity of goods and/or services in the future, marketing programs based upon customer loyalty developed other types of exchange. Frequent-flyer programs and the like, for example, have gained wide popularity in many industries.
Frequent-flyer programs encourage buyers to purchase travel-related services, often air travel, at an agreed to price. When a buyer purchases air travel, he or she subsequently earns credits toward future air travel, usually measured in miles, which can be redeemed within a specified time period. When the buyer purchases additional air travel from the same airline in the future, the balance of accumulated miles increases.
These programs further reward customer loyalty by increasing the rate at which frequent-flyer miles are earned as buyers continue to purchase from the same airline. With few exceptions, frequent-flyer miles must be redeemed for air travel or travel-related service, for example car rentals and hotels. Unlike the book club example discussed above, frequent-flyer programs do not offer air travel up front and in advance, and do not obligate the buyer to purchase anything in the future. Examples of companies employing frequent-flyer types of incentive programs include United Airlines, Hilton Hotels, and United Parcel Service. These companies offer related future services in exchange for present purchases.
Other types of incentive-based point programs encouraging buyers to purchase are growing rapidly. Many companies have implemented programs in which buyers are awarded points whenever purchases are made. Restrictions on the buyer usually include the method of payment such as use of a specific credit card or using a specific purchasing venue such as a global communication network, for example the Internet. A further restriction limits buyers to choose from suppliers that accept earned points in lieu of money or credit payment. Companies accepting specific points in exchange for goods and/or service do not accept unrecognized points awarded by companies involved in different programs.
In most points programs, a buyer is credited points based upon purchases at agreed to rates, for example, 1 point per one U.S. dollar. Points earned through qualified purchases are assigned to the purchaser after receipt of the merchandise and/or service. The points are available for redemption after a minimum interim time period subject to cancellation based upon unavailable credit, product returns or order cancellation. Redeemable points may be used for goods and/or services in the future only after this interim period has expired.
Unlike the book club and frequent-flyer program examples discussed above, incentive-based points programs often allow points to be redeemed for unrelated goods and/or services. For example, a buyer will purchase furniture and earn 150 points which she later redeems for a personal stereo from a different supplier. Examples of companies offering incentive programs featuring points for purchases include MyPoints.com, Yahoo!Shopping.com and AltaVistaRewards.com. Other companies in addition to dot-com companies offering points for purchases include Radisson Hotels, American Express, and Marriott Hotels.